Depreciation Given the choice, would a firm prefer to use MACRS depreciation or straight-line depreciation? Why?
Question:
Depreciation Given the choice, would a firm prefer to use MACRS depreciation or straight-line depreciation? Why?
Step by Step Answer:
For tax purposes a firm would choose MACRS because it provides f...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
Students also viewed these Corporate Finance questions
-
Collection and disbursement floats which would a firm prefer: a net collection float or a net disbursement float? Why?
-
Under what conditions would a firm prefer the following? a. A fixed-rate term loan from a bank b. A floating-rate term loan, with the rate tied to the banks prime rate
-
Why would some prefer to use normal activity rather than expected actual activity to compute a predetermined overhead rate?
-
Assume a portfolio of two assets, with $10m invested in asset 1 and $5m invested in asset 2. The per pound covariance matrix of the two assets is: Asset 1 Asset 2 The best hedge of asset 2 is: Asset...
-
A baseball bat balances when placed on a fulcrum in the position shown in FIGURE 9-30. Is the mass of the bat to the left of the fulcrum greater than, less than, or equal to the mass of the bat to...
-
Comparative balance sheets for International Company are presented as follows. Additional information: 1. Net income for 2020 was $135,000. 2. Cash dividends of $70,000 were declared and paid. 3....
-
Discuss what AIDS is and how it is contracted.
-
The Food Marketing Institute shows that 17% of households spend more than $100 per week on groceries. Assume the population proportion is p = .17 and a sample of 800 households will be selected from...
-
At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $170,000. It is expected to have a five-year life and a $30,000 salvage value. Required a. Compute the depreciation...
-
Arndt, Inc., reported the following for 2024 and 2025 ($ in millions): a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2024 for $60 million. The cost...
-
Opportunity Cost In the context of capital budgeting, what is an opportunity cost?
-
Net Working Capital In our capital budgeting examples we assumed that a firm would recover all of the working capital it invested in a project. Is this a reasonable assumption? When might it not be...
-
If a couple has six boys, what is the probability that a seventh child will be a girl?
-
According to the IBSA 2014 survey of Financial Services the sector is dominated by the 'big four' domestic banks, which hold a combined market share of 33 percent. Outline some developing...
-
How do evolving patterns of urbanization in the 21st century, such as the rise of megacities, urban-rural linkages, and the emergence of new urban forms, reshape our conceptualization of urban spaces...
-
Short strangle options trading strategy consists of writing a call and a put option at different exercise prices. Construct a profit/loss diagram for this option strategy given the following...
-
discuss the role of technology and innovation in shaping the trajectory of urbanization, from smart city initiatives and digital infrastructure to the advent of shared mobility services and the rise...
-
Sales Cost of goods sold Accounts receivable 2021 $ 422,976 214,038 20,514 2020 $ 272,888 138,094 15,964 2019 $223,679 115,190 15,344 2018 $ 150,120 76,910 8,782 2017 $ 111,200 55,600 7,606 Compute...
-
What is the biggest mistake that many organizations make when using the top-down approach?
-
A survey of 70 college freshmen asked whether students planned to take biology, chemistry, or physics during their first year. Use the diagram to answer each question. How many of the surveyed...
-
People experiencing a medical emergency experience better outcomes if someone near them has first aid training and can immediately begin providing assistance. As a result, first aid training and...
-
What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
-
What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
-
What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
-
Consider the following information: State Probability ABC Inc.'s Return Boom 0.25 15% Normal 0.50 8% Slowdown 0.15 4% Recession 0.10 -3% i. 11. iii. What is the expected return? What is the variance?...
-
The mythical country of Quitar has just established a policy to give very generous in-kind benefits to the nation's poor, currently defined as those earning less than $10,000 a year. Several years...
-
Question 1 The external loadings imposed on a horizontal beam is shown in Figure Q1(a). The beam is pivoted at Point A. (a) (b) 100 N/m 50 N/m 20 N 40 cm 50 cm Figure Q1 70 cm Apply the principle of...
Study smarter with the SolutionInn App